The State of Minority- and Women- Owned ... - Cleveland.com

Legal Standards for Government Affirmative Action Contracting Programs
Finally, Congress has taken significant steps to minimize the race-conscious nature of the
Program. “[W]ealthy minority owners and wealthy minority-owned firms are excluded, and
certification is available to persons who are not presumptively [socially] disadvantaged but can
demonstrate actual social and economic disadvantage. Thus, race is made relevant in the
program, but it is not a determinative factor.” 45
b. Challenges to the Application of the Disadvantaged Business Enterprise
Regulations
DBE programs based upon a methodology similar to that for this Study for Cleveland, including
the availability analysis and the examination of disparities in the business formation rates and
business earnings of minorities and women compared to similarly situated non-minority males,
have been held to be narrowly tailored in their application of Part 26.
i. Sherbrooke Turf, Inc. v. Minnesota Department of Transportation
In this case, the Eight Circuit Court of Appeals, which governs Missouri, held that Congress had
a compelling interest in enacting the DBE program legislation, the regulations implementing the
statute were constitutional, and the Minnesota Department of Transportation’s (MnDOT) DBE
Program was sufficiently narrowly tailored.
After holding that Part 26 is facially narrowly tailored, the court turned to MnDOT’s
implementation of the regulations.
MnDOT had relied upon a NERA availability study to set its DBE goal that applied the approach
used for this Report. The Study first determined that DBEs comprise 11.4 percent of highway
construction prime contractors, of which 0.6 percent were minority-owned and 10.8 percent were
women-owned. Based upon the analysis of business formation statistics, the Study next
estimated that the number of participating minority-owned firms would be 34 percent higher in a
race-neutral market. Therefore, DBE availability figure was adjusted from 11.4 percent to 11.6
percent, which MnDOT adopted as its overall goal for fiscal year 2001. MnDOT predicted that it
would meet 9 percent of its goal through race-conscious measures, based upon the drop from
10.25 percent DBE participation in 1998 to 2.25 percent participation in 1999, when its previous
program was enjoined in Sherbrooke I. USDOT approved this goal.
The Eighth Circuit opined that while plaintiff:
[P]resented evidence attacking the reliability of NERA’s data, it failed to establish that
better data was [sic] available or that Mn/DOT was otherwise unreasonable in
undertaking this thorough analysis and in relying on its results. The precipitous drop in
DBE participation in 1999, when no race-conscious methods were employed, supports
Mn/DOT’s conclusion that a substantial portion of its 2001 overall goal could not be met
with race-neutral measures, and there is no evidence that Mn/DOT failed to adjust its use
45 Id. at 973.
NERA Economic Consulting 27